ENTREPRENEURSHIP - AT CROSS ROADS

* Dr.C.Thilakam** S. Peter Emil Jebakumar

Abstract

Entrepreneurship is generally regarded as a force

of change, innovation and development in modern economies.

Entrepreneurs bring new and better products to markets, restore

allocative efficiency through arbitrage and reinvest their

profits. We develop a subjectivist theory of entrepreneurship that

focuses on individuals, their knowledge, resources and skills, and

the processes of discovery and creativity, which constitute the

heart of entrepreneurship. First, we establish the fundamental

importance of subjectivity in entrepreneurial discovery and

creativity that lead to economic change and to influencing

organizational learning. It also indicates that personal and often

conflicting perceptions of risks and opportunities, regardless of

their realism, constitute important drivers of entrepreneurial

action. For entrepreneurs the results may increase awareness of

their own role, problematize risks and opportunities, and also

suggest new and creative ways for developing the venture. More

specifically the results can be used as an analytical template in

the evaluation of, e.g. financial and technological risks. . The

paper also contributes the challenges of an entrepreneur who is

risk taker and explains the various explain about the risk taken

by him. It also includes the key risk factors to minimize for

startup success.

Keywords: Action, behavior, entrepreneur, technology,

entrepreneurship, creativity, embeddedness, risk, challenges.

*Professor & Head Department of commerce, Manonmaniam SundaranarUniversity, Tirunelveli. ** M.phil Full time scholar Department of commerce, ManonmaniamSundaranar University, Tirunelveli.

ENTREPRENEURSHIP- AT CROSS ROADS

* Dr.C.Thilakam

** S. Peter Emil Jebakumar

INTRODUCTION

 Entrepreneurship is a process of identifying and starting a

business venture, sourcing and organizing the required resources

and taking both the risks and rewards associated with the

venture. Entrepreneurship" may result in new organizations or

revitalize mature organizations in response to a perceived

business opportunity. A new business started by an entrepreneur

is referred to as a startup company. In recent years, the term

has been extended to include social and political forms of

entrepreneurial activity.

Entrepreneurship within a firm or large organization has

been referred to as intra-premiership and may include corporate

ventures where large entities spin off subsidiary organizations.

ENTREPRENEURSHIP

The capacity and willingness to develop, organize

and manage a business venture along with any of

its risks in order to make a profit. The most obvious example of

entrepreneurship is the starting of new businesses.

In economics, entrepreneurship combined with land, labor,

natural resources and capital can produce profit. Entrepreneurial

spirit is characterized by innovation and risk-taking, and is an

essential part of a nation's ability to succeed in an ever

changing and increasingly competitive global marketplace.

DEFINITION:

Peter Drucker: An entrepreneur searches for change, responds

to it and exploits opportunities. Innovation is a specific tool

of an entrepreneur hence an effective entrepreneur converts a

source into a resource.

TRAITS OF AN ENTREPRENEUR

An entrepreneur frequently has to wear many hats. He has to

perceive opportunity, plan, organize resources, and oversee

production, marketing, and liaison with officials. Most

importantly he has to innovate and bear risk. The main functions

of an entrepreneur are as fo

Innovation:

Innovation is one of the most important functions of an

entrepreneur according to Schumpeter. An entrepreneur uses

information, knowledge and intuition to come up with new

products, new methods of reducing costs of a product, improvement

in design or function of a product, discovering new markets or

new ways of organization of industry. Through innovation, an

entrepreneur converts a material into a resource or combines

existing resources into new and more productive configurations.

It is the creativity of an entrepreneur that results in invention

[creation of new knowledge] and innovation [application of

knowledge to create new products,

services or processes.] Systematic innovation means monitoring

the following for innovative

Opportunity:

The unexpected success or failure or any unexpected outside

event, (e.g. when the IT bubble burst the ITES sector

started growing.)

Innovation based on process need [e.g. plate based cameras,

film based cameras, digital cameras]

Changes in industry and market structure [e.g. video

cassette VCD, DVD, Blue ray disc]

Demographics changes (e.g. increasing number of working

women and nuclear families in most metropolitan cities)

New knowledge (e.g. Pentium chip)

Risk and uncertainty bearing:

According to Hozelist an entrepreneur performs the

function of risk and uncertainty bearing. Every decision

pertaining to development of new products, adapting new

technologies, opening up new markets involves risk. Decision-

making in an environment of uncertainty requires anticipation of

risk. Profit is said to be the reward for anticipating and taking

such risks. However it is pertinent to mention that the

entrepreneur is not a gambler, he only takes calculated

risks. An entrepreneur develops the art of decision-making

under conditions of uncertainty as a matter of survival.

Organization building:

An entrepreneur has to organize men, material and other

resources. He has to perform the functions of planning, co-

ordination and control. He has to use his leadership qualities to

build a team, generate resources and solve problems. With his

organizational skills an entrepreneur builds an enterprise from

scratch, nurtures it and makes it grow. His vision sows the seeds

for a sound and vibrant organization and synergies are built in

the enterprise. According to Kilby in a developing country even

the imitator entrepreneurs are very important and the

entrepreneurial role encompasses the following:

Perception of market opportunities

Gaining command over scarce resources

Purchasing inputs

Marketing the products

Dealing with bureaucrats

Managing human relations within the firm

Managing customer and supplier relations

Managing finance

Managing production

Acquiring and overseeing assembly of the factory

Industrial engineering

Upgrading process and product

Introducing new production techniques and products

Opportunities for the entrepreneurs in various type of services/

industries

There is certainly no formula to become a successful

entrepreneur. Some may succeed and make good profits, others sink

along the way. Which are the most lucrative sectors for

entrepreneurs? Here's a list of 20 good opportunities

entrepreneurs can look at...

Tourism

Tourism is a booming industry in India. With the number of

domestic and international tourists rising every year, this is

one hot sector entrepreneurs must focus on. India with its

diverse culture and rich heritage has a lot to offer to foreign

tourists. Beaches, hill stations, heritage sites, wildlife and

rural life, India has everything tourists are looking for.

But this sector is not well organized. India lacks trained

professionals in the tourism and hospitality sectors. Any

business in this sector will thrive in the long run as the demand

contuses to grow every year. Foreign tourist arrivals during

January-March were 15.63 lacs with a growth rate of 12.8 percent,

compared to 13.86 lacs during the first three months last year.

Automobile

India is now a hot spot for automobiles and auto-components.

A cost-effective hub for auto components sourcing for global auto

makers, the automotive sector is potential sector for

entrepreneurs. The automobile industry recorded a 26 per cent

growth in domestic sales in 2009-10. The strong sales have made

India the second fastest growing market after China. India being

one of the world's largest manufacturers of small cars with a

strong engineering base and expertise, there are many segments

that entrepreneurs can focus on in India's automobile and auto

components sector.

Textiles

India is famous for its textiles. Each state has its unique

style in terms of apparels. India can grow as a preferred

location for manufacturing textiles taking into account the huge

demand for garments. Places like Tirupur and Ludhiana are now

export hubs for textiles. A better understanding of the markets

and customers' needs can boost growth in this sector.

Social ventures

Many entrepreneurs are taking up social entrepreneurship.

Helping the less privileged get into employment and make a viable

business is quite a challenge. There are many who have succeeded

in setting up social ventures. With a growing young population in

rural areas who have the drive and enthusiasm to work,

entrepreneurs can focus on this segment.

Software

India's software and services exports are likely to rise

with export revenue growth projected at 13 to 18 percent to hit

about $68.02 billion by 2011-2012.With one of the largest pool of

software engineers, Indian entrepreneurs can set higher targets

in hardware and software development.

The information technology enabled services have contributed

substantially to the economy. With more companies outsourcing

contracts to India, business to business solutions and services

would be required. Entrepreneurs can cash in on the rise in

demand for these services with innovative and cost effective

solutions.

Engineering goods

India continues to be one of the fastest growing exporters

of engineering goods, growing at a rate of 30.1 per cent. The

government has set a target of $110 billion by 2014 for total

engineering exports. Entrepreneurs must capitalize on the booming

demand for products from the engineering industry.

Franchising

India is well connected with the world. Hence, franchising

with leading brands who wants to spread across the country could

also offer ample opportunities for young entrepreneurs. With many

small towns developing at a fast pace in India, the franchising

model is bound to succeed.

Education and Training

There is a good demand for education and online tutorial

services. With good facilities at competitive rates, India can

attract more students from abroad. Unique teaching methods,

educational portals and tools can be used effectively to make the

sector useful and interesting.

Food Processing

India's mainstay is agriculture. Entrepreneurs can explore

many options in the food grain cultivation and marketing

segments. Inefficient management, lack of infrastructure, proper

storage facilities leads to huge losses of food grains and fresh

produce in India.

Entrepreneurs can add value with proper management and marketing

initiatives. The processed food market opens a great potential

for entrepreneurs be it fast food, packaged food or organic food.

Fresh fruits and vegetables too have a good demand abroad. A good

network of food processing units can help potential exporters

build a good business.

Corporate demands

There will be a good demand for formal attire with more

companies opening their offices in India. People who can meet

this demand in a cost effective way can make a good business.

With corporate gifting getting very popular, this is also a

unique business to explore.

Ayurveda and traditional medicine

India is well known for its herbal and ayurvedic products.

With increasing awareness about the ill-effects allopathic

medicines, there will be a huge demand for cosmetics, natural

medicines and remedies.

Organic farming

Organic farming has been in India since a long time. The

importance of organic farming will grow at a fast pace,

especially with many foreigners preferring only organic products.

Entrepreneurs can focus on business opportunities in this sector.

There are many small-time farmers who have adopted organic

farming but the demand is still unmet, offering many

opportunities for those who can promote organic farming on a

large scale.

Media

The media industry has huge opportunities to offer young

entrepreneurs. With the huge growth of this segment, any business

in this field will help entrepreneurs reap huge benefits.

Television, advertising, print and digital media have seen a boom

in business.

Digitization, regionalization, competition, innovation, process,

marketing and distribution will drive the growth of India's media

and entertainment sector, according to Ficci.

Packaging

With China invading the markets with cheap plastic goods and

packaging materials, there is a good opportunity to develop good

packaging materials to meet domestic and foreign demand. There is

a huge demand various sectors like agriculture, automotive,

consumer goods, healthcare infrastructure and packaging sectors

for plastics.

Floriculture

India's floriculture segment is small and unorganized. There

is a lot to be done in this lucrative sector. The global trade in

floriculture products is worth $9.4 billion. With a 8 per cent

growth, it is expected to grow to $16 billion by 2010. India's

share in world trade is just 0.18 per cent. This is a huge market

to be tapped considering the rising demand for fresh flowers.

More awareness and better farming and infrastructure can boost

exports.

Toys

Another evergreen industry is toy manufacturing. India has

potential to manufacture cost effective and safe toys for the

world. With Chinese toys being pulled up for toxins, the market

for safe and good quality toys beckons Indian entrepreneurs.

Recycling business

E-waste will rise to alarming proportions in the developing

world within a decade, with computer waste in India alone to grow

by 500 per cent from 2007 levels by 2020, according to a UN

study. This sector opens a viable business opportunity for

entrepreneurs in terms of e-waste management and disposal.

CHALLANGES OF AN ENTREPRENEUR:

A risk- taker is one who is not afraid to go out, deviate

and be different. With the current economic crisis that blatantly

stares at us, many entrepreneurs are at the “playing- safe” mode,

meaning it is difficult and uncalled for right now to take risks

in any undertaking. Of course, who would not want to be

successful without having to take the risk of failure? In any

undertaking, there is always a 50/50 chance. The 50 percent can

be for the success of the endeavor and obviously, 50 percent for

the failure. Admittedly, the latter is feared the most by

thriving entrepreneurs.

The first risk that an entrepreneur faces is the market

risk. You should know your market thoroughly and discover their

need and desires. You should even anticipate their every move. In

this way you can position your promotional strategies and

advertising to attract their needs and weaknesses. Some

entrepreneurs are afraid to take the risk in bringing out and

introducing a new product. An entrepreneur with great

entrepreneur skills applies the latest and the best entrepreneur

strategies that can stir-up the market and avoid the risks of

being disliked and rejected.

The second risk is the credibility risk. If there is a new

and outstanding product from the Body Shop, for sure, many people

will buy because of the name of the company that sells it.

Credibility is an important factor in any business undertaking.

Thriving entrepreneurs have to keep in mind though that being new

is not at all a threat. If only best entrepreneur strategies are

used with a combination of entrepreneur skills, then nothing will

go wrong with the business. The driving motivation to succeed and

excel is also very important. However, it is a given fact that

not all entrepreneurs have the best entrepreneur strategies and

excellent entrepreneur skills. You do not have to be totally

perfect! Most entrepreneur stories will tell you that the most

successful business persons did not go to formal training schools

in entrepreneurship. Learning comes from the act of doing.

The third risk is the investor risk. Putting up a company

requires a great amount of capital. Liquidity and a vast pool of

resources is very important to the success of the business. The

entrepreneur should be smart enough with some tinge of gut-feel

in knowing and choosing the right and most reliable investors to

boost financial backing and maintain liquidity. The fourth risk

is taking a consultant and an expert in the field. Although they

are already experts and masters, most entrepreneurs still

consider it as a risk. Their in-laid plans may not work and you

have already paid them in full! In seeking expert advice, an

entrepreneur with terrific entrepreneur skills can determine the

soundness of the advice.

ENTREPRENEURS THINKING MUST BE LIKE THAT TO GET SUCCESS:

Apart from their use of effectual reasoning, here are some

other factors that believe makes entrepreneurs entrepreneurial

and identify the mindset that helps explain how they think:

• Entrepreneurs think by actions: The entrepreneurial mindset

craves action, so much so that they twist the age old maxim to

read “Ready, Fire, Aim.” Action for the entrepreneur tests their

hypotheses and so provides them with special market intelligence

regardless of the outcome. They are more interested in

establishing a ‘proof of concept’ via active iterations and

pivots than they are in developing the perfect theoretical plan.

• Entrepreneurs think in possibilities: Entrepreneurial

thinking is not constrained by the reality of the present.

Entrepreneurs see the reality of possibilities that are not yet

evident to others. As HBS professor Howard Stevenson explains:

“Entrepreneurs pursue opportunities without regard to resources

currently controlled.” Entrepreneurs don’t need all the resources

in place before pursuing an opportunity … just the important

ones.

• Entrepreneurs can think in ambiguity: For the vast majority

of people, ambiguity means confusion, disorganization and

debilitation. Not so for the entrepreneur who can still function

effectively and move forward decisively in the world of

conflicting views, uncertain outcomes, and unresolved issues that

exists as they craft and hone their opportunity from the evolving

mass of possibilities. The Lemonade entrepreneurial principle

actually embraces surprises that arise from this uncertainty and

will adjust goals on the fly rather than be held by previous

ones.

• Entrepreneurial thinking embraces risk: While many money

makers implement risk avoidance strategies to create wealth, the

entrepreneur knows that opportunities are more likely to exist

for them by embracing and managing risk rather than simply

avoiding it. It is in these risky areas that the established

players avoid, that contains the gold nugget opportunities.

Entrepreneurs have developed a whole host of risk management

treatments to help them in this regard like lean startups,

customer development process, beta launches, iterations and

pivots, affordable loss experimentation, ‘under the radar’

launches, embedded entrepreneurship, and beachhead strategies.

The Affordable Loss Principle drives entrepreneurial action based

on the acceptable downside, more than it does on the

attractiveness of the predicted upside.

• Entrepreneurs think in patterns: Entrepreneurs are always

looking for cause and effect patterns in the world around them.

Patterns help the entrepreneur to not only understand the world

they live in but it also helps them predict the future and to see

opportunities that most people miss. These patterns may be the

ability to see the logical extension of a change or the creative-

disruptive force of something new or the cross pollination

ability of an innovation into new fields. Entrepreneurs also know

how to apply the concepts and patterns from existing worlds to

explain innovations in worlds as yet unseen.

• Entrepreneurs think incessantly: There is no off button in

the entrepreneur’s mind. They are incessantly curious,

opportunistic, and optimistic. They train their minds to problem-

solve every issue that crosses their path. Every person they meet

is a potential resource, in every problem they encounter they

seek a solution and in every change they look for the new

opportunity potential.

• Entrepreneurs think internally: Rather than let others and

external factors determine the value of outcomes, the

entrepreneur uses their internal locus of control to direct their

destiny, to work for their achievements, to delay gratification,

and to plan with an eye for long-term benefits. Entrepreneurs

never think of themselves as victims. Everything they do has a

personal development focus, even when doing unappreciated work

for others.

• Entrepreneurs think of value-add: Rather than singularly

employ a ‘business-savvy’ focus of extracting benefit by

exploiting a market/customer weakness, entrepreneurs focus

primarily on creating new value for others (by increased benefit

or reduced cost) and then finding a way of securing a slice of

that increased value for themselves.

• Entrepreneurs think of making meaning: Entrepreneurs have an

inherent desire to make a difference and to make their world a

better place. So, for the entrepreneur, making money becomes a

means to that end and not an end in itself.

TEN KEY RISK FACTORS TO MINIMIZE FOR STARTUP SUCCESS:

 List of key risk drivers that every entrepreneur

and every investor should evaluate and minimize in starting a

business:

Team experience and depth risk. Here I’m talking about both the

experience and track record of the founders in starting a

business, as well as their experience and knowledge of the

business domain. Like most professionals, when I get a business

plan, I flip first to the founders section to see if it is a

balanced team who has been there and done that.

Market and opportunity risk. There is always less risk with a

well-defined problem in a large and growing market. All the

people in China are a large and growing market, but all the

people with cancer is much more well-defined. It’s hard to make

money in a shrinking market, or with a solution that is “nice to

have” versus painfully needed.

Competitive risk. Think seriously about the number and clout of

your competitors. Having none is a red flag (may mean no market),

but having more than a couple of large ones may mean this is a

crowded space. Even in an open space, you need intellectual

property, like patents, to keep potential competitors from

overrunning you.

Financial risk. Very few businesses can be started without money.

You as the founder will be expected to put your own “skin in the

game.” The business plan should be realistic about how much cash

will be required to break-even, and how big the return will be

for investors in the first five-year timeframe.

Market entry strategy risk. The selection of an inappropriate

pricing, marketing, or distribution strategy is a large potential

risk. For example, many new social websites proclaim that they

will offer a free service, and live on ad revenues (not likely in

the first year without a huge marketing investment).

Political and economic risk. Sometimes founders are just in the

wrong place at the wrong time. Recessions are a tough time to

sell luxury goods. Under-developed countries may have a strong

need for your product, but are often unstable and dangerous. Four

specifics include tax rates, tariffs, expropriation of assets,

and repatriation of profits.

Technology risk. New technologies, especially those characterized

as “paradigm shifts” or “disruptive” may have long and costly

acceptance cycles, or may run into unpredictable performance or

manufacturing problems. Medical technologies have costly legal

testing requirements, approval processes, and insurance

validation.

Businesses with high attrition rate risk. Certain business

sectors have historical high failure rates and are routinely

avoided by investors and many founders. These include food

service, retail, consulting, work at home, and telemarketing. On

the Internet, I would add new social networking sites, and new

matchmaking sites.

Operational risk. Some businesses require huge support or

administrative infrastructures. For example, vehicle fuel

improvements require service stations and maintenance shops

nationwide, before they are viable. Even small operations can

have breakdowns of specialized equipment and complex support

processes.

Environmental risk. A nuclear reactor built on an earthquake

fault line is a huge risk. Evaluate your business and location

for sensitivity to floods, hurricanes, and catastrophic pollution

problems, like an oil spill in the Gulf of Mexico.

Conclusion

In the modern world people can no longer

expect large enterprises to guarantee them jobs for life.

Individuals are increasingly expected to seek out their own

opportunities, actively create value and behave ethically, rather

than faithfully follow rules and routines set by others. In

particular, today's young people need to learn to be

enterprising, both when working for others and when setting up

their own businesses. Being enterprising involves taking

responsibility for decision making, becoming increasingly self

reliant, pioneering, adventurous, daring, dynamic, progressive,

opportunist, ambitious and holding your values, as well as being

able to initiate ideas and see them through into action. While

many new businesses start as a one-man show, successful

entrepreneurship is characterized by quick and stable growth.

This means hiring other people to do specialized jobs. For this

reason, entrepreneurship requires extensive organization and

delegation of tasks. It is important for entrepreneurs to pay

close attention to everything that goes on in their companies,

but if they want their companies to succeed, they must learn to

hire the right people for the right jobs and let them do their

jobs with minimal interference from management.

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